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Xerox amends accounting
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July 13, 2001: 8:54 a.m. ET
Amid investigation, company takes conservative stance in SEC filing
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NEW YORK (CNNfn) - After facing scrutiny from the Securities Exchange Commission on past accounting practices, Xerox Corp. reportedly shifted to a more conservative standard, according to a report Friday.
The Stamford, Conn.-based company revised its first-quarter results in a filing with the SEC Thursday, reducing pre-tax profits by $7 million due to changes in accounting estimates, the online edition of the Wall Street Journal reported.
Xerox (XRX: down $0.05 to $8.34, Research, Estimates) also said it did not issue banks the right to future sales from short-term copier rentals, a practice that generated $845 million in pre-tax income for the company between 1998 to 2000.
According to the report, a Xerox spokeswoman said the company "absolutely" did not change its accounting procedures, but a former Xerox executive said aggressive accounting principles were used in the past to boost results.
The SEC filing includes the report of a disagreement between Xerox's management and a panel hired by the company's board to investigate whether it improperly established a $100 million reserve in 1997, which led Xerox to restate three years of financial results.
In addition, the filing contains a decision by an Illinois court stating Xerox broke pension laws in evaluating lump-sum payments to retirees. The ruling follows a class-action suit involving 25,000 people. Xerox said it will appeal the ruling. 
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